Financial Objects warns of sales dip

Financial objects, the banking software and services firm, yesterday warned that tough market conditions had taken their toll on sales in 2001.

The company also warned it would have to make an £850,000 exceptional provision in its second half results to cover a bad debt. It said that the client in question, believed to be a "European online banking company", was not representative of a typical customer and said it was "confident" the issue was an isolated incident.

Shares in Financial Objects finished down 4.5p, or 5.4 per cent, at 78.5p as analysts downgraded their forecasts for both 2001 and for the current year.

Financial Objects said 2001 sales were expected to be "slightly below" the 2000 figure of £18.4m "reflecting the challenging market conditions". Operating profits, it said, would be in line with market expectations. The company's house broker, ABN Amro, lopped £2m off its 2001 sales estimate to £17m. It also cut £1.1m off its pre-tax profit forecast to £1m, mainly to reflect a lower interest contribution.

Financial Objects, which plans to announce its 2001 results on 13 March, said it now had 10 customers using its ActiveBank software.

Analysts at Equityinvestigator, an online research company, said: "The positive aspects of the announcement are that trading is in line with our expectations, the company remains cash generative, and what we believe was the key second-half 2001 risk [completing insufficient ActiveBank contracts to meet forecasts] has been eliminated."

They thought the likelihood of the company having to make a bad debt provision had been high, and therefore the move had "little negative implication".